Why isn’t Retention More Exciting?

I recently attended the National Arts Marketing Project Conference (NAMP), which is always a great conference to get a pulse on our industry from a marketing perspective, and this year was no different. What really stood out to me this time around, were presentations on the subject of retention, sometimes known as churn. These terms describe the same thing — essentially how many patrons attended your organization last season and didn’t return this season.

This presentation from JCA demonstrates conclusively that between 60% and 70% of customers churn every year (based on data from 40 large arts organizations). For those of us that have been working in the industry for a while, this is not news.

This revelation represents the tip of the iceberg in a reality that seems illogical. Although recurring revenue (money from patrons that come back year after year) makes up a disproportionate amount of an organization’s total annual revenue, the amount of time, attention, research and investment in retaining the existing audience is minuscule by comparison.

In a Q & A session, I posed the question as to why otherwise rational business managers routinely ignore this fundamental truth in our industry? We are decidedly unlike commercial industries where there are entire departments dedicated to retention. For instance, how many arts organizations do you know that have a director of audience retention?

My theory is that for many organizations, finding new customers matches their mission — they get funding for this activity, they focus and measure it, and use it as a representation of their effectiveness in building their artform. That’s exciting, but evidently, retention isn’t.

However, a house has to be built on a strong foundation, and the foundation of our industry is renewals and recurring revenue. I fear our emphasis on new audiences continues to skew our hiring and our compensation of those that manage retention.

It seems to me we ought to have conferences that are SOLELY about revenue retention. If there were one thing that could help our industry thrive (and in some cases survive), it would be making our focus on revenue retention much more important than it appears to be today.